Laws20058 Commercial Lease In Australia Assessment Answers

The rules that protect the members of the tribe from such violent acts were developed with the provisions of strict punishments to the wrong doers and the reason behind development of such rules in the constitution is to maintain law and order in the tribe. All the authorized individuals as well as the members of the tribe should follow the rules and regulations established within the Constitution of the tribe. Such rules would forbid the individuals or group of people to perform violent acts and would impose obligations on them. The provisions of punishment on causing injuries to others would deter them from doing so. The rules would exert coercive power upon individuals or group of people by the imposition of penalties on non-compliance with various types of duties or obligations (Scott, 2004).

Part B

In UK, all criminal cases are started in a magistrate court, so once a person is held guilty of a criminal offence, he/she is taken to magistrate court. However, magistrate court handles summary offenses and either way cases only, such as assault, burglary or drug offences and most serious offences known as indictable offences are taken to the Crown Court such as murder, rape and robbery. In some cases, the magistrate court decides custody or bail for the offender until next hearing. After final verdict,

the magistrate court can give punishment of imprisonment up to 6 months or at least 1 year in case the offender has committed more than one crime. The court can also charge compensation, community sentence or applicability of bans. The range of sentences given by Crown Court can include community sentences as well as imprisonment  which can even be life sentences as well (Gov.uk, 2018).

The Magistrate Court can order a term of imprisonment to the accused under the age of 21 years and the accused under the age of 17 years can be detained in a Youth Justice Centre. The maximum imprisonment imposed by Magistrate Court can be 2 years for single offence and aggregate total sentence can be 5 years. Criminal sentencing that can be given by the courts include custodial sentences or imprisonment and non-custodial alternatives such as orders or bonds (Edney, 2011).

The three parts of Hart’s Concept of Law include the Existence of legal System; the Existence of Legal System in comparison with the concept of law i.e. Sartorius’s Critique of Hart; and the rationale for minimum conditions. The laws imposing responsibilities upon the individuals are known as ‘primary rules of obligation’ (Magistrates’ Court of Victoria, 2018). The secondary rules are essential for providing reliable account of the- primary rules. It enables the courts in resolution of disputes related to the imposition of primary rules. However, the secondary rules comprises of rules of recognition, rules of change, and rules of adjudication (Scott, 2004).

Part C

The decision of High Court in Gumland Property Holdings Pty Limited v Duffy Bros Fruit Market (Campbelltown) Pty Limited [2008] is important for property-owners as well as leaseholders, because the High Court supported the right of the property-owners to get hold of damages, which include loss of bargain damages, subsequent to the termination for the violation of essential and established term by the leaseholder (Gumland Property v Duffy Bros Fruit, 2008).

Facts of Case

The landlord Transit Management Pty Ltd (Transit) had a grocery shop on rent in a shopping complex. The renter Duffy Bros Fruit Market Pty Ltd (Duffy) took a 15 year lease of that grocery rental from Transit in 1993. Since 1999, Duffy was having trouble in trade and was not able to pay rent on time. Duffy and Transit signed a deed which provided that Transit would make efforts to secure sub-tenancy of building, the liability for payment of sub-tenancy rental fee remained to be the liability of Duffy, the rent out that was required to be paid by Duffy as per the lease was decreased. Also, conditions of the lease were approved and confirmed(High Court of Australia, 2008).

It was established under the deed that if further breaches of lease was not committed by Duffy, he would not have to pay full rent under the contract of lease. In 2001, a part of the building was sold by Transit to Gumland. However, the lease was not documented till 2005 (Lethlean, 2008). When the sub-lease expired in 2002, the sub-tenant did not want to extent the lease for another year and therefore entered into over-holding period. The sub-tenant started paying 50% if the rent that was required to be paid under sub-lease because of which, Gumland claimed that Duffy breached lease as well as deed and issued default notices and demanded payment of arrears. When payment was not approaching, Gumland terminated the lease in 2003. Gumland sought amount of $2,096,514 along with interest from Duffy.

Issue-Was landlord liable to recover the failure of bargain damages?

Rule

Section 117 of Conveyancing Act 1919 (NSW) (Austlii, 2018)

It was held by Supreme Court that the sub-tenant failed to give the rent, which was itself a violation of necessary conditions of ‘Lease and Deed’ under Real Property Act 1900 (NSW) under Clause 4 of the Act. So, Gumland was allowed to recuperate the amount overdue on lease along with failure of bargain damages.

The ruling of Supreme Court was reversed on appeal when the Court of Appeal said that the violation of deed was not related to the essential obligation to pay complete rent. Additionally, Gumland unsustainably ended the lease and was entitled only to recuperate the amount overdue on lease and not the bargain compensation. 

Application

Duffy argued that Gumland had no right to terminate as rental fee was not a necessary condition of lease, for which it was argued by Duffy that right to take legal action only occurs when Duffy had not accepted the contract signed between them. The Contract law was also applied to the case which allows innocent party to end the lease and to recuperate the failure of bargain damages. 

Conclusion

The appeal of Gumland was allowed by the High Court and all the damages sought by them were awarded. Under Clause 3.2 of the Act, because of stated conditions of lease, Duffy was legally responsible to pay complete rental fee in 7 days after the rent became due. In addition, general contract principles applied to lease allows innocent party to end the contract and to recuperate the failure of bargain damages in case of violation of conditions. So, the failure of bargain damages was to be recovered by Gumland accordingly.

The case is a convincing example of the necessity of clearly drafted leasing document providing true intentions of the parties. The parties should be attentive to the conditions as well as the repercussion, of violation of essential conditions of lease, by any of the party.

Part D

In 2007, Mr and Mrs Newlands entered into a contract with a builder for the construction of triple -storey housing property up to lock-up stage with plumbing and other interiors yet to be done. Due to various structure related issues, Newlands sued the constructer in Victorian Civil and Administrative Tribunal (VCAT) claiming that the property had a fault in basic structure. In 2010, the VCAT ordered the amount of $400,000 to be awarded to the Newlands. After some time in 2010, Mr Kalabakas i.e. claimant bought the property from Newlands on discount based on incomplete construction till lock-up stage and insured it with Chubb Insurance Company.

The policy was renewed in 2011 and the insurance was arranged through broker of plaintiff by taking specific requirements from the plaintiff over phone. In 2012, fire destroyed the property. The plaintiff claimed insurance company to pay for $1.4 million forth replacement cost. Also, claim for contents and demolition was made under insurance policy. The claim was declined by the insurer based on fraudulent misrepresentation and non-disclosure (Probert & Boughton, 2016). 

Issue- Was the insurer liable to pay insurance claim to the plaintiff?

Rule-

Insurance Contracts Act 1984 (Cth) (ICA)

Section 21(1) of ICA enforces duty of disclosure on an indemnified regarding every matter in his/her knowledge and which is essential for the insurer to take decisions regarding acceptance of the risk and on what terms and conditions.

Section 26 of ICA is related to the misrepresentation where a statement made by a person associated with the insurance contract was actually false and was made on the belief, the statement shall not consider as misrepresentation. Also, the statement made by a person knowing that it is actually false and knowing that the choice of the insurer whether to admit the risk, depends on the relevancy of the statement (Kalabakas v Chubb Insurance Company of Australia Ltd [2015] VSC 705 (11 December 2015), 2015).

Section 28(2) of ICA deals with the consequences of non-disclosure or falsification and allows the insurer to nullify the contract in such circumstances.

Application-

It was claimed by insurer that plaintiff was aware of four relevant requiring disclosures under Section 21(1) of ICA, which were related to its choice regarding acceptance of the risk and on what conditions, which were incomplete construction till commencement of initial policy, property under dispute regarding structural defects, inadequate resolution of structural issues and lack of valid occupancy certificate (Hodges, 2015). In addition, the insurer agreed that failing to disclose these issues was considered as fraud according to which, renewal of policy could be avoided from its inception under Section 28(2) of ICA.

Conclusion

The Court considered the alternative defence of the insurer and held that although the non-disclosure was not deceptive, the liability of the insurer have been zero. Additionally, court declared that the insurer would decline to consider the risk without considering misrepresentations in the quotation sheet by the plaintiff and the court entitled the insurer to lessen its legal responsibility to zero under Section 28(3) of ICA.

The case suggested that the allegations of fraud must be appropriately pleaded and underpinned by evidence particularly documentary evidence.

Part E

Facts-Pedro and Lisa were retailers and they used to sell imported French jewellery in Melbourne, Victoria. When Lisa sold her business to Pedro, she entered into the contract according to which, she agreed that she would not carry on or be engaged in the sale of imported French jewellery all over in Australia for a time period of two years from the initiation of the contract. Only 1 year after selling the business, Lisa established a new retail business in Cairns, Queensland, selling imported French jewellery.

Issue- Can Pedro enforce the contractual promise against Lisa?

Rule- Australian Contract Law

The Contract Law of Australia is applicable in this case which requires consideration along with offer and acceptance between the parties to the contract.

The Common Law states that for an agreement to be obligatory, the promise must offer consideration i.e. sum of certain type, for the promise received by them. The unjustified promises cannot be usually enforced. However, the only consideration is the cost predetermined by the promisor, can be used in broader sense (Clarke, 2015). It is not essential for it to be monetary or even of financial value but it requires some kind of detriment by the promisee. So, there is significance of consideration in a contract formed in Australia which can be anything to be called as consideration legally (ACCL, 2016).

All the rules and regulations associated with the contract law of Australia are binding to both the parties to the contract and breach of contract by anyone of them, would lead the party in legal trouble. 

Application

In this case, Pedro and Lisa entered into a contract when Lisa sold her entire business to Pedro and agreed that she would not perform or be engaged in the sale of imported French jewellery all over Australia for a period of two years. The promise by Lisa was a type of consideration in the contract. One year after the sale of business, Lisa broke her promise and established a new retail business in Queensland of selling imported French jewellery (Lavan, 2018). She breached the contract as there was one year left in completion of contract and she established new business with French jewellery itself. It was a contractual promise and it was the liability of Lisa to bind to it till the completion of the contract (Lavan, 2018).

Conclusion

As Lisa broke the promise of not getting engaged in the import of French jewellery for a time period of two years after selling the business to Pedro, Pedro can take legal actions against Lisa. The contractual promise can only be enforced by the court as it was a valid enforceable contract existing between both the parties (Rule of Law Institute of Australia, 2018). The court will provide specific amount of compensation to Pedro for the financial loss incurred to him due to establishment of new retail business by Lisa. So, Pedro can only be provided with the damages caused due to breach of contract by Lisa, but contractual promise can only be enforced by the court.

References

ACCL. (2016). Australian Contract and Consumer Law.

Austlii. (2018). Conveyancing Act 1919 - SECT 117. 

Clarke, J. (2015). Consideration. 

Edney, B. (2011). Australian Sentencing. Thomson Reuters.

Gov.uk. (2018). Criminal courts. 

Gumland Property Holdings Pty Limited v Duffy Bros Fruit Market (Campbelltown) Pty Limited [2008] HCA 10, S395/2007 (High Court of Australia March 27, 2008).

High Court of Australia. (2008). High court of Australia. 

Hodges, K. (2015). Non-disclosure and misrepresentation: Underwriting records prevail Ð Kalabakas v Chubb Insurance Company of Australia Ltd [2015] VSC 705. 

Kalabakas v Chubb Insurance Company of Australia Ltd [2015] VSC 705 (11 December 2015), S CI 2013 02801 (Supreme Court of Victoria December 2015).

Lavan. (2018). Collateral contracts and contractual promises: Clarification from the High Court. 

Lavan. (2018). Contractual promises – are they binding.

Lethlean, J. (2008). Australia: A Landlord´s Right To Recover Loss Of Bargain Damages. 

Magistrates’ Court of Victoria. (2018). Sentencing. 

MIT OpenCourseWare. (2012). Paper 1: An Analysis of Hart’s Theory of Primary and Secondary Rules . 

Payne, M. (2009). Hart's Concept of a Legal System. William & Mary Law Review, 18(2), 287-319.

Probert, A., & Boughton, L. (2016). Australia: Fraudulent non-disclosure and misrepresentation in property claim successfully proven. 

Rule of Law Institute of Australia. (2018). Case Note – Contract Law. 

Scott, A. (2004). H.L.A. Hart’s The Concept of Law.